May Consumer Prices Up 2.6%, Largest Increase in 9 Years... Impact of Soaring Oil Prices

Statistics Korea to Announce 'May Consumer Prices' on 2nd... Prices of Agricultural, Livestock Products and Petroleum Products Rise
"International Oil Prices Expected Not to Rise Further, Inflation Stability Anticipated in Second Half"

According to Opinet, the oil price information service of Korea National Oil Corporation, the average retail price of gasoline nationwide in the third week of March was 1,517.4 KRW per liter, up 18.8 KRW from the previous week. This is the first time in a year since the second week of March last year that the weekly average gasoline price has exceeded 1,500 KRW. A gas station in downtown Seoul on the 21st.
Photo by Mun Ho-nam munonam@

[Asia Economy Reporters Son Seon-hee and Jang Se-hee] Consumer prices rose by 2.6% in May, marking the highest increase in 9 years and 1 month. This was due to continued price increases in agricultural and livestock products caused by poor crop yields and the impact of avian influenza (AI), as well as a base effect from last year's sharp drop in international oil prices, which had kept inflation low.

According to the consumer price trends announced by Statistics Korea on the 2nd, the consumer price index for May was 107.46 (2015=100), up 2.6% compared to the same month last year. This is the highest level since April 2012 (2.6%), 9 years and 1 month ago. After recording 1.1% in February this year, the index rose by 2.3% last month, marking two consecutive months of increases in the 2% range.

Prices for goods rose 4.0% compared to a year ago. Agricultural, livestock, and fishery products increased by 12.1% due to poor crop yields and the impact of AI. Among these, notable increases were seen in green onions (130.5%), eggs (45.4%), and rice (14.0%).

Prices for industrial products rose 3.1%. Petroleum products increased by 23.3%, the highest in 12 years and 9 months since August 2008 (27.8%). Among petroleum products, gasoline rose 23.0%, diesel 25.7%, and automotive LPG 24.5%. Functional cosmetics increased by 12.7%, and bread by 5.9%, with most items showing significant increases.

Service prices rose 1.5%. While personal services increased by 2.5%, public services decreased by 0.7%. Among personal services, dining out prices rose by 2.1%. Statistics Korea explained that this reflects the rise in agricultural and livestock product prices.

The living cost index, which reflects perceived inflation focusing on 141 items with high purchase frequency and expenditure share, rose 3.3% compared to a year ago. This is the largest increase since August 2017 (3.5%).

Statistics Korea stated that despite the continuous rise in prices, there is no need to worry about inflation. Eo Un-seon, Director of Economic Trend Statistics Review, said, "The base effect from last year's low inflation rate is significant, so the upward trend is expected to continue for a while," but added, "The rate of increase in agricultural and livestock product prices has slowed since last month, and experts expect that the rise in international oil prices will not expand further." He also expressed hope that prices will stabilize in the second half of the year.

This content was produced with the assistance of AI translation services.